From Brazil

Five years ago, less than 5% of Brazil's soybean exports were shipped from ports in the soybean expansion areas of the country. Today that proportion has reached 16%, according to one big commodity shipper. That comes to 1.5 million metric tons (mt) annually, compared to only about 200,000 mt in 1994.

That makes Brazil's port privatization program - especially for small and growing ports in central, western, northern and northeastern Brazil - of interest to big grain handlers and shippers. Take the Port of Santarem on the TapajOs River, near its confluence with the Amazon in the northern state of Para. This port handles an average of 43 ships per month - far fewer than the big Brazilian ports of Santos or Paranagua. Today, the Port of Santarem handles mostly wood. But it could provide another key to cutting transportation costs for expansion-area soybean growers.

The man behind the soybean waterway on the Rio Madeira to the Amazon says that building a terminal at the Port of Santarem would be an "ideal" way to get soybeans out of Brazil's north. He's Blairo Maggi, the world's biggest soybean producer and now a state senator from the state of Mato Grosso.

Under Brazil's port privatization program, that opportunity came up last year when four port lots were offered for lease. Thirteen companies, including one in which Maggi is a partner, started in the hunt for multiple-year leases at the port. Bureaucratic and environmental issues pared that list to four serious candidates by August, says a port official. When the day came to present bids, in November, only one company showed up, says Raimundo Lima, a port spokesman. That company is Cargill Agricola, SA, the Brazilian subsidiary of Cargill, Inc.

Lima says that, while all the details aren't available, Cargill plans to construct its own soybean terminal at the port. "Construction has already started, and it could be ready in less than two years," he adds.

Proof of the value of privatization and improvements to the port lies in the fact that one company has already shipped some expansion-area soybeans using the TapajOs - even without port facilities.

Last May, a convoy of 75 trucks loaded with soybeans from northern Mato Grosso made the 750-mile journey to the town of Itaituba, on the banks of the TapajOs. Only the first 210 miles of the roadway, BR-163, are paved. The journey took three days - only seven hours to travel the paved portion - but the convoy did arrive. Barges were waiting to take its 2,000 mt of soybeans to the Amazon River, and, from there, to Europe.

Shipping soybeans from the TapajOs River, says the mayor of one city on its banks, will save farmers 50 cents/bu on transportation costs. Privatized port facilities on the TapajOs could make a big difference.

With an estimated 12 million acres available for agriculture in the region, port official Lima says port upgrades will "absolutely bring more soybeans and jobs to the area."

Investing In Brazil, Postscript

In 1995, foreign direct investment in Brazil - in everything from concessions at ports like Santarem to telecommunications and foods - accounted for only 10% of the country's gross domestic product (GDP). It's picked up quite a bit since: Some $71 billion of foreign money has been invested here in the years since. That means foreign investment here could account for up to 20% of GDP for 1999, twice as much as five years ago.

Combining foreign investment with Brazil's own investments in new plants and equipment reveals that infrastructure is a key target of growth. A recently released study reports that, of nearly $98 billion invested in Brazil last year, nearly half - $46 billion - went to the energy, telecommunications and transport sectors. More specific numbers revealing investment in infrastructure projects of specific benefit to soybean exports are hard to come by, but "transport sector" investments such as roads, ports, railways and waterways clearly help reduce the cost of getting soybeans out and inputs in.